Thursday, January 12, 2017

Malaysia reverses scrapping of levy

Malaysia has reversed the scrapping of levy and decided to continue with deducting levy from wage of foreign workers until January 2018, after its decision to shift the levy burden to employers, announced on New Year’s Eve, hit a snag.
The Malaysian National News Agency reported that the cabinet meeting yesterday agreed to postpone the implementation of levy payment on foreign workers by employers. "The levy payment will be enforced under the Employer Mandatory Commitment to next year."
Earlier, on December 31, the Malaysian government had announced that the levy should be paid by the employers on behalf of foreign workers. The scrapping of the levy would have increased the flow of remittance to Nepal as Malaysia is one of the most favoured destinations of the Nepali migrant workers.
According to president of Nepal Association of Foreign Employment Agencies Bimal Dhakal, the decision came as a bad news for both the migrant and the country’s economy.
“It sure would hit workers’ earning and flow of remittance," he said, adding that the decision will further discourage fresh migrant from going Malaysia.
Though, number of migrant workers going to Malaysia has dropped since earthquake of April 25, 2015, a period that saw numbers of policy level changes including Nepal’s decision to adopt free-ticket-free-visa policy and Malaysia’s move to regulate inflow of foreign workers to create more job opportunities for workers, it is estimated that over 700,000 Nepali migrant workers are currently working in Malaysia.
And they have been paying levy to the Malaysian government themselves, as of now.
Nepali workers used to pay up to 250 ringgits as levy for every 1,000 ringgits they earned.
With the decision put on a hold, foreign migrants working in the manufacturing, construction and service sector will continue to pay annual levy of 1,850 ringgit from their hard-earned wage, the Malaysian news agency reported, adding that the Malaysian authorities were forced to defer the date for the enforcement of the new levy related policies following protest from the employers’ unions. "It is not just on levy, but on the rights of the employer to have direct access towards the workers, rather than going through a middle man, how to cut down bureaucracy procedures and how to have fast employment of foreign workers."
It remains unclear whether the stalled new policies would be pursued after the extended deadline of 2018 or not.
Malaysia’s employers’ unions together with local workers’ unions had stood against shifting the burden of levy on local businesses arguing that it would increase the cost of production. They had also warned that the consumers would eventually end up paying more for their products and services if the levy is imposed on the local business. Workers’ unions, on their part, claimed that exempting foreign workers from levy would attract more migrants, dampening the prospect of locals getting the jobs.
Malaysia had first decided to impose levy on workers in 2013, shortly after raising the minimum salary of foreign workers to RM 900, up from RM 650. The minimum wage was later raised to RM 1,000. The levy rate was revised several times in the following years.
On the eve of New Year, Malaysian deputy prime minister Ahmad Zahid announced another major change shifting the burden of levy from foreign workers to employers, a decision that draw cheers from foreign workers and right groups, and strong opposition from employers’ and local workers’ unions.